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More companies are moving applications into the cloud, but the pain of the migration is holding them back from doing more.

Nearly nine out of ten companies are now using cloud-hosted applications or services, a number that has been steadily rising in recent years: in 2010 less than half said they were using such services.

But further examination of the data from tech industry group the Cloud Industry Forum reveals a mixed picture: while some companies are moving wholesale into the cloud, the majority remain cautious.

Although 88 percent of the organisations surveyed are using cloud technologies, they tend to be limited in scope. Web hosting (65 percent), Platform-as-a-Service and productivity packages tools such as Microsoft Office 365 and Google Docs topped the list. But companies remain cautious about moving their core business systems into the cloud: only 21 percent are using cloud-based finance systems (although those surveyed said that could rise to 43 percent in five years).

Most companies define their strategy as 'hybrid' (58 percent) and only a quarter said their primary approach to IT is on-premise. But that's still more than the minority -- 17 percent -- who said cloud was their main approach.

Part of the explanation may be that moving applications to the cloud remains far from painless.

The research found that on average it took 15 months to complete to migrate apps to the cloud, and nine out of ten companies faced some sort of difficulty during the process.

Complexity was the biggest headache listed (mentioned by 43 percent), followed by a lack of in-house skills (32 percent, and 41 percent of businesses with less than 20 staff) and concerns about the cloud's dependency on the internet (31 percent), the report found.

"The largest organisations in the sample and those from the public sector particularly struggled with data sovereignty during their cloud migrations," noted the Cloud Industry Forum. Data sovereignty was an issue for 26 percent, while 24 percent worried about a lack of clarity around the charges involved. And 22 percent struggled with the business case.

For three-quarters of respondents, these migration difficulties had consequences including delays in product and service development (in 39 percent of cases), plus lost productivity and revenue losses.

Data privacy remains a significant concern for users of cloud services, along with fears about loss of control and data sovereignty. But the biggest reason execs cited for not moving applications to the cloud was a lack of budget; this was followed by security and privacy concerns, and the integration challenges of legacy systems (although over a third said that replacing legacy IT technologies was the main business objective driving investment initiatives in cloud within their organisation).

Flexibility just edged out cost saving as a reason for moving applications to the cloud, but the report found that six in ten respondents made cost savings as a result of their use of cloud-based services. The average figure is 17 percent, and this is expected to climb to 30 percent over the next five years, as cloud users recoup the initial costs associated with their migrations. That cost saving is not apparently created by cutting IT jobs: only 15 percent said migrating to the cloud had reduced the size of the tech team.

The research polled 250 senior IT and business decision-makers in large enterprises, small to medium-sized businesses and public sector organisations. – ZD Net